Tuesday, January 29, 2013

You strive to keep your customers satisfied – but are you keeping them loyal?

Smart companies know the importance of striving to keep their customers
happy. After all, studies have found
that the cost of acquiring a new customer is five to 10 times more than the
cost of retaining an existing one. And
so the measurement of customer satisfaction and loyalty becomes an important
part of a marketing strategy – for example, an annual survey to customers to
gauge how they feel about the business.

But, you may ask, why measure both satisfaction and loyalty –
aren’t they the same thing? A satisfied
customer is a loyal customer, right? Not
necessarily.

Customer satisfaction is fairly straightforward. At a basic level, a measurement of
satisfaction tells us how pleased (or unhappy) a customer is overall or with a
specific aspect of a company. Surveys
ask customers to indicate their level of satisfaction directly, typically using
a multi-point scale (such as very satisfied, somewhat satisfied,
neutral, somewhat unsatisfied, and very unsatisfied).

Customer loyalty measures the security of a customer base – that is,
how likely they are to remain customers.
Satisfaction certainly plays a part in customer loyalty. But loyalty is more complex than simply how
happy a customer is with a company or product.
Many factors affect how likely a customer is to purchase from the same
company again versus going to a competitor.
For example, considerations such as price, the availability of viable
alternatives, the difficulty or cost of switching, and even a feeling of
connection or relationship with the company, all play a role. Because customer loyalty is multi-dimensional,
it can be difficult to accurately assess through a single survey question. Therefore, companies often employ a loyalty
index – a series of questions addressing loyalty through different angles, the
answers to which are later compiled into a single metric that can be tracked
over time.Conducting a formal customer satisfaction and
loyalty survey can give you a full picture of how your customer base sees your
company, which aspects shine and which are falling short, and – perhaps most
importantly – where to focus in order to best solidify your customers’ loyalty.

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CyberEdge Group is a premier research and marketing consulting firm serving the needs of high-tech vendors and service providers. Headquartered in historic Annapolis, Maryland, CyberEdge is a "virtual" consulting company comprised of more than two-dozen highly experienced career consultants spanning a variety of disciplines and industries.